Group health plan sponsors should be aware of the Mental Health Parity and Addiction Equity Act (“MHPAEA”) compliance requirements since enforcement related to MHPAEA is a top priority for the federal agencies and the US Department of Labor (“DOL”), which exercises primary enforcement jurisdiction over MHPAEA for approximately two million health plans covering roughly 136 million Americans. The DOL has signaled they will be aggressively evaluating group health plans for adherence to these complex requirements. Congress, regulators and attorneys are increasingly focused on MHPAEA compliance given COVID-19’s impact on mental health and the opioid epidemic. We have outlined herein what employers and plan sponsors need to be aware of related to the MHPAEA.
What Does MHPAEA Require? In general, MHPAEA requires that group health plans ensure that the benefits provided for mental health and substance abuse disorders (“MH/SUDs”) are on par with those provided for medical and surgical (“M/S”) benefits. This parity applies to both financial quantitative treatment limitations (“QTLs”) like co-pay and dollar limits or limitations on the number of days of treatment, as well as non-quantitative treatment limitations (“NQTLs”) such as medical necessity requirements, prior authorizations and pre-certification requirements imposed by a group health plan or health insurance issuer.
Recent Guidance on MHPAEA Best Practice A recent amendment to MHPAEA from the Consolidated Appropriations Act, 2021 (“CAA”), formalized longstanding MHPAEA compliance “best practices” and codified prior guidance. It expressly requires plans and issuers to document comparative analysis by demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply each NQTL to MH/SUD benefits, both as written and in operation, are comparable to and applied no more stringently than those used to apply each NQTL to M/S benefits in the same benefit classification. Health plans and issuers could technically be asked to produce their comparative analysis now based on the regulations. Although the statutory compliance requirements are based on elements in the DOL’s MHPAEA Self-Compliance Tool, there is no uniform standard for how the comparative analysis should be formatted or conducted. The DOL issued additional guidance on April 2, 2021 about what constitutes a minimum, sufficient comparative analysis explaining that carefully applying the Self-Compliance Tool should put plans and issuers in a strong position to comply with the requirements.
The 2022 MHPAEA Report to Congress A recently released 2022 MHPAEA Report to Congress suggests health plans and health insurance issuers are failing to deliver parity for MH/SUD benefits. The report highlights the recent emphasis on greater MHPAEA enforcement in addition to guidance to correct those failures, and makes recommendations to strengthen MHPAEA’s consumer protections and enhance enforcement abilities. According to the Report, preliminary determinations of non-compliance were made for many plans and issuers, but no final determinations have been made yet. Instead, plans are still able to take corrective action. An enforcement fact sheet summarizes investigations and public inquiries, including complaints related to MHPAEA during fiscal year 2021.
About Adherence and Compliance Part of the compliance requirements are that each plan sponsor (i.e., Employers, Taft Hartley Funds, etc.) complete a detailed analysis of their plan, both written and in operation. This comparative analysis requires plan sponsors to “show their work” in a very detailed fashion as to how they determined they comply with the law. The analysis must be performed on all vendors offering services under the plan, not just the health plan. For example this includes the health plan TPA, PBM, and other vendors who potentially could play a role in treatment limitations for MH/SUD benefits. This analysis then must be made available both to plan members and the DOL upon request.
The DOL will generally request a copy when they are investigating potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, although the law also permits the DOL to request a copy of the report in other circumstances, which could include a routine health plan audit. If the DOL requests the report and determines that it is insufficient, it will tell the plan sponsor what additional information is needed. If the DOL determines that there is a problem in how the NQTLs are being applied to MH/SUD benefits, it will give the plan sponsor 45 days to correct the issue. If the issue is not corrected, the plan will be required to notify its participants that its plan violates the MHPAEA.
How Does This Impact My Plan? The burden of who must ensure compliance depends on the funding of the group health plan:
Fully Insured Plans – Plan sponsors that offer fully-insured plans are not responsible to ensure compliance. Rather the carrier is obligated to ensure compliance and prepare the report if requested.
Self-Funded Plans – Plan sponsors that offer self-insured benefit plans are responsible for ensuring compliance and preparing the report, if requested. Even if not requested, it is expected that plan sponsors have their plans evaluated. The TPA and PBMs may be of some assistance in helping to ensure plan designs are compliant. They may provide support in helping to validate compliance but such help may be limited. In the end, responsibility will be on the employer to ensure compliance and if requested, produce a report documenting compliance.
What Should Self-Insured Plan Sponsors Do? Self-funded plan sponsors are facing mounting pressure to examine their practices for compliance with NQTL parity requirements in the MHPAEA. As for QTLs, Conner Strong & Buckelew is actively reviewing plan designs for QTL limit issues under self-insured plans. However, that is only a fraction of what needs to be evaluated, as the NQTL review process is complex and time consuming and production of a comparative analysis report requires highly specialized work. Here are some practical items for consideration in terms of next steps:
Given the lack of a specific, standardized format or template from the regulators for exhibiting a sufficient NQTL comparative analysis, many plans may not move forward at this point to produce a comparative analysis. Many plans have assumed they can rely on their TPA or service providers to provide the analysis. In fact, DOL has recommended that Congress amend ERISA to provide a direct line of attack to enforce parity compliance against service providers, TPAs, or other entities that provide administrative services to ERISA group health plans.
Some employers and plan sponsors may take a “wait and see” approach as the Biden Administration is expected to publish over the summer a new proposed rule on MHPAEA addressing the recent legislative changes and evolving guidance. It may be that those rules will give clearer instruction on the NQTL comparative analysis and articulate additional standards for certain NQTLs.
Conner Strong & Buckelew will continue to work with our clients to analyze and understand the complex requirements of the MHPAEA, and we can refer our clients to qualified advisors that exclusively specialize in MHPAEA work and the production of NQTL reports that can validate compliance for a self-insured sponsor who has decided, with the advice of their counsel, that they will move forward to prepare an NQTL comparative analysis of their plans.
We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.